The SDO Pros

I was having an email exchange today on my Tucker's Point SDO post, with someone who I respect immensely and really understands tourism in Bermuda. He presented the pro-SDO case, which paints a picture which hasn't really been presented publicly by Tucker's Point or the PLP:

While I understand and agree with a lot of what you say on the T's P SDO, there are other factors also to consider.


1. The impact on Bermuda's reputation in the marketplace if yet another hotel (and there haven't been many) that has invested a ton of money in the Bermuda product goes under.

2. The impact on the potential to attract ANY hospitality investors going fwd to Bermuda as destination...potential which is already at a low...this would sink it..and affect more than just HSBC and the owners of T's P.

3. The impact on jobs if there is another receivership. Don't kid yourself, there is no guarantee that another buyer would pick it up and operate it in the same way..or that this would happen quickly. Example - Four Season in Exuma, Bahamas went under...it is now a Sandals resort that Butch Stewart bought for pennies on the $...nothing like what a FS would have been to that island.

4. The impact on Bermuda's marketing and brand (weak as it may currently be) with the loss (before it started) of a Rosewood hotel - only the 2nd brand in here (Fairmont being the other).

I know that this is all tough to offset against what is being proposed...but it should at least make people stop and think (particularly those who purport to have all the answers as to how to turn Bermuda tourism around - not talking about you, my friend...!!)).

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But I don't think people here understand what REALLY makes tourism work.

It is VERY complicated..and there is a new model that is still unfolding..the old one is "broke" (pun intended...!!)

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Trust me, HSBC WILL be taking a haircut..that debt WILL be written down..by
how much who knows, but there is no way they can carry it on their books at
current levels (I'm told it's north of $120 mil).

However, we'll never know because, unlike Butterfield which is local, HSBC
doesn't have to produce a financial statement to that degree of detail.

Re Tuckers Point taking a hit...they have been taking it for YEARS with
losses upon losses. They will NEVER ever be profitable enough to see the
shareholders getting a return. Privately they might acknowledge that, but
publicly it can never be said. They could certainly prove it.
It makes me laugh when people ask for their accounts..if I were them, I'd
hand them out...publish them, let it all hang out...!

There is a lot of merit to these points, and I would admit to finding many of them difficult to dismiss out of hand if Bermuda wants to remain in the tourism business.

This suggests that a Tucker's Point failure would present a systemic risk to Bermuda's tourism product.

What I think is particularly problematic is that the Government and Tucker's Point, perhaps out of political need to not admit the true state of Bermuda's tourism product post Brown's fictitious 'Platinum Period' and pride to not have Tucker's Point's financials laid bare, have really not presented the case well - or at all. They've asked the public to accept this with little information.

If this is indeed the state of tourism in Bermuda (and it is), Bermudians need to know. We all know it's not healthy, but years of political spin have been painting a different picture with the PLP even recently posting on their website about Tourism's turnaround being 'alive and well', when it seems more like a death spiral.

So a little food for thought. I don't think there is an easy answer here, but I would not be able to support the SDO based on the lack of information presented, and if I was Tucker's Point I would present the financials, and if I was Government it's time to be honest on this front for the first time in a decade.

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